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A Global Recession Would End the Red-Hot U.S. Economy. “Transitory Weakness?”

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“A global recession is recession that affects many countries around the world — that is, a period of global economic slowdown or declining economic output.” — wikipedia

“Weakness abroad reverberates in the United States through lower orders for American exports and financial market volatility, she added. More than 40 percent of sales by companies in the Standard & Poor’s 500-stock index, a key stock market benchmark, come from overseas.” — washingtonpost

“Even if the US economy continues to outperform its global peers, it cannot burn red-hot indefinitely while the rest of the world enters a recession.

“Transitory weakness” is what the Federal Reserve is probably going to allege, (“it’s only temporary, keep buying, all is good”) but it’s not quite that simple.” — ccn

What I gathered from a 2011 article on, is that nobody knows what “transitory” means.

Larry Doyle, Author of “Sense on Cents”, explained, “Ooooh!! Ouch!! There is no formal economic definition to be found for ‘transitory’. That’s not good. Is the American public getting used and abused here?”

“Let’s retrace Ben’s statements and use our own ‘sense on cents’ to determine the real meaning of this seemingly vague and nebulous term that now dominates our economic landscape.” — businessinsider

“You’re correct, we haven’t seen the GDP number yet but we are expecting a relatively weak number for the first quarter, something a little under 2 percent. Most of the factors that account for the slower growth in the first quarter appear to us to be transitory.

Inserting our definition, the statement would read:

You’re correct, we haven’t seen the GDP number yet but we are expecting a relatively weak number for the first quarter, something a little under 2 percent. Most of the factors that account for the slower growth in the first quarter appear to us to have an unsure and unknown degree of size, length, depth, breadth, and impact.” — businessinsider

Larry goes on to say, “let’s try to further refine the definition in true layman’s terminology. Instead of utilizing “to have an unsure and unknown degree of size, length, depth, breadth, and impact”, what do I think many Americans think of Bernanke’s utilization of the term, transitory?

Let’s reference a favorite clip that truly captures the real meaning of this economic term….

Go here…”

That’s is how I envision Fed Chair Powell, as he analyzes U.S. monetary policy.

The U.S. government has used the term “transitory” in the past (2011), as a response to slowing economic growth.

“Increases in the prices of energy and other commodities have pushed up inflation in recent months. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations.” — federalreserve

From that statement, I see transitory as meaning; transitional or temporary. Therefor, “transitional weakness” would mean; temporary weakness. I think the term gets used when the government wants us to ignore red flags.?

To gauge inflation or deflation, the most commonly used statistics are noted in the Consumer Price Index (CPI).

“The Consumer Price Index is a definite danger to the Dow Jones and other major indices, particularly as the Fed appears to be bowing to pressure to stop tightening and could let the economy run hot to reboot investment confidence.

While good for the DJIA in the short-term, the rising deficit cannot be ignored forever. Even Fed Chair Powell has acknowledged this.

In short, today’s 20,000 Non-Farm Payrolls figure shouldn’t be enough to make you start boarding up your windows, but if the next few months are similarly poor, then maybe it’s time to start buying some nails.” — ccn

Oh no! The energy sector is down almost 5% in 2019! Keep an eye on oil prices (currently . If the energy sector is hit by recession, oil prices could retreat to 2016 levels. That would incur a 50% drop in the value of USOIL (WTI) shares.

Though more dramatic, this chart displays what a 75% drop in oil prices looks like. It sell-off occured during “the Great Recession of 2008/09”.

We all know what happened in 2008/09. In case you forgot or don’t know, the U.S. stock market crashed more than 50% in a year! It took four years to recover.

The Dow’s gained 400% since The Great Recession’s (2009 low). As this blog’s title explains, the U.S economy/ stock market has been running Hot. Red-Hot! For ten years straight.

The intriguing part of the above image is that in 2006, the Fed raised rates (sound familiar?). The GDP growth rate was 2.9% (4th highest of the 10 years). Then in the following year, a bank crisis occurs (banks are closing at record rates now), the year after that; The Great Recession hit.

During the economic recession/stock market Crash, job numbers declined, unemployment rates increased, properties were foreclosed, and stock prices plummeted.

Whether you’re employed or a student, married or single, young or old, a recession will impact you. If you have a retirement account, drive a vehicle, own a home, or go to school, you’re likely to be impacted even more.

When people get stuck owing money on things they can no longer afford they get burned, bankrupted even. When panic selling takes place in a market, people seek cash ASAP. They want to get their investment out before it’s worth less (or worse yet, worthless).

We know global markets are either in or nearing recession, but the U.S. market seems to be doing just fine (according to some talking heads on CNBC). My thoughts are, they pump anything that suits THEM.

*i.e. Jim Cramer pumping Canopy. I’m sure he holds a fat stack of Canopy Growth Corp (CGC). Whether or not it’s even a good investment. Jim’s got millions of social media followers. Most of whom would say, “how high?” when he says, “jump!”

I like some talking heads more than others but ultimately, I’m not buying on any of their recommendations. Can’t trust a one of ’em. The only way to win in the market is to be in something before it starts getting hyped. That’s where “sell the news” comes from.

It’s apparent to me, that a global recession is underway. People could soon be looking to get their cash out of equity markets. “What will they do with the cash?” is the question. They won’t be entrusting it to big banks.

If believe if this situation were to occur, the Cashless monetary system would boom.

“Lower-income communities often become “food deserts,” areas where supermarket chains decide they can’t or won’t do business — leaving residents without reliable sources for good groceries.

That situation has an equally unhealthy financial parallel: A town or neighborhood can become a “banking desert,” with no branches where borrowers can turn for business loans or mortgages.” — yahoofinance

A cash shortage and booming, Cashless infrastructure. Sure, why not? Sounds feasible to me.

Today, we have the opportunity to park our “cash” in Cryptocurrency. No big banks touching those funds! No bank account needed! Transact cheaply, internationally, instantly, and all without the influence of big banks and government. Decentralization!

Decentralization describes the design of an open public network that isn’t managed by a central party (Crypto). Instead, peer-to-peer interaction drives the network, as no third party is needed!

“Decentralized currency’s value is represented by the currency’s “coin” — an encrypted piece of computer code that is difficult to reproduce, but easy to verify. This “coin” has two “keys”: a public key that anchors it to its hosting blockchain or publicly distributed ledger, and a private key that infers ownership and is held in the “coin’s” owner wallet.” — bitcoinmarketjournal

I’ve tried my best to explain my thought process (expecting stock market crash during recession, and mass adoption of Cashless systems. After that, an easy transition to Crypto. I give it 5 years.

Though it’s obvious Cashless payments are becoming popular, I still don’t notice many people using their phone or watch to transact.

It’s becoming more available. Mass adoption will take a few more years I think. The day everyone’s using their phone as a wallet is the day that Crypto nuts should rejoice.

The transition from “Cashless fiat” or “digital currencies” to Cryptocurrencies would be likely. It’s just a matter of downloading a different app to gain the benefits of Crypto.

Customers can choose to use Apple Pay or CashApp, or both. They pretty much do the same thing yet one of them offers Bitcoin (CashApp)

Imagine five years from now….. Will CashApp be the only provider of Crypto services? I don’t think so. I think the industry will be much bigger. By that point, many different Cryptocurrency/ blockchain start-ups will be nearing ten years of existence.

Again, the fact is- cash transactions are diminishing. Cashless payments and Crypto products/ services are in their infancy. All it would take to jump start the alternative monetary system is a good ‘ole recession.

I’m here watching WTI and the Dow like a hawk (silently cheering for a stock market crash and Crypto boom). Sorry..?!.

I want to get ahead. Gotta have one go up and the other go down, then flip. Double dip!

Whatever your stance on Cashless payments, monetary policy, global recession, or Crypto; I think we can all agree that we’re in the middle of some crazy techie digital madness.

I just don’t expect to see cash or cards in the future. Much like the checkbook went bye bye. Though there’s always that one in checkout who holds the line up. (Makes me instantly angry, Get with the times man!) Sorry, or woman. Or is it they or them? You get my point. Madness!

#moneygoals LOL. Gettin’ me a mini giraffe.

Decentralization to the rescue! Go Crypto Bulls!

IG @therealrisksavage

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